VisionLink Blog

By Ken Gibson

June 30, 2015

Defending Executive Compensation


In today's business and political environment, executive compensation is under scrutiny.  This is an issue that impacts primarily public companies, but even private organizations may find themselves defending their approach to upper tier compensation, especially that of the CEO.  If that happens to you, what will your response be?

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By Ken Gibson

June 23, 2015

What Kind of Annual Incentive Plan Do Most Private Companies Use?


The leaders of most organizations look for some means of validating their approach to the type of incentive plan they put in place--or whether to even have a value-sharing arrangement at all  For such chief executives and others with responsibility for variable pay plans, data is a useful tool.  It can, however, also be a dangerous one. The value of data is that it gives a picture of what the market is doing; how others are addressing key compensation issues with which most businesses grapple. The danger comes when organizations put too much weight on what the data indicates and then simply try to mirror what others are doing. 

Let's deal with each of these issues one at a time.

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By Ken Gibson

June 17, 2015

"What is World-Class Compensation...and How Do I Achieve It?"


Most leaders of growth-oriented companies have large ambition. They are not looking for incremental change. They are seeking breakthrough results.  If you sit in meetings with these CEOs, you won’t hear things like: “Well, let’s look closely at our competition and see if we can mirror what they are doing, but maybe just a little better.” The idea is laughable. Instead they communicate and demonstrate an insatiable curiosity about what’s possible and where they want to take the company in the future.

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By Ken Gibson

June 12, 2015

Annual Incentive Plans: The 3 Most Common Mistakes


Many, if not most, organizations have some kind of annual incentive plan. Unfortunately, a majority of them are not happy with it. Often, our phone rings when an organization can't take it anymore and wants help with its plan. When it does, we typically hear one or more of the following complaints:

  • "Our bonus plan has become an entitlement--people just expect it."
  • "Our incentive program isn't structured properly--we're paying out benefits when we aren't even profitable."
  • "Our plan is completely discretionary. I go into the closet at the end of the year and try to determine how much of our profit to share, who should get a payout and how much they should receive. There's got to be a better way."
  • "Our short-term incentive plan has become too complicated. We have too many metrics and people are confused."
  • "Our employees don't understand what they need to do to maximize the payout from their plan--and then they complain about how much they get."

There's more, but you get the picture. The issues these business leaders articulate are symptomatic of three common mistakes companies make with their annual incentive plans:

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By Ken Gibson

June 09, 2015

How to Ensure Your Incentive Plans "Work"


Much has been written about incentive plans in business and whether they really make a difference.  Critics argue that money is not a motivator and that you can't pay people to perform. Fair enough. I don't argue with either of those assumptions.  However, people who are working hard to create value for the business instinctively know there should be some means of sharing in the growth they help fuel.  They seek a sense of partnership with company owners and won't become full stewards of the their vision unless their role is codified financially. Similarly, shareholders want business partners, not just employees. They expect performance and productivity and feel incentive pay can be used as a strategic tool towards that end...if applied properly.

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By Ken Gibson

June 04, 2015

Incentives: Short-Term vs. Long-Term


Most business leaders don't object to paying incentives.  What they struggle with is what kind of results they should reward, who should receive them, how they (the incentives) will be "paid for" and what the right balance is between short and long-term value-sharing.  These are difficult issues and create a lot of pain for those trying to make effective decisions in this regard. 

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By Ken Gibson

May 21, 2015

3 Ways to Turn Deferred Compensation into an Incentive Plan


Last week I talked about why deferred compensation (DC) is still a viable plan for the right organizations. Some of those companies are interested in a plan that serves as more than a means for employees to defer income and save taxes.  They want it to have a performance component associated with it. So this week, I'll discuss how to turn a plan into a means of creating greater focus on the results the company wants its top performers to achieve.

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By Ken Gibson

May 13, 2015

Should You Have a Deferred Compensation Plan?


Over the years, deferred compensation plans have experienced varying degrees of popularity in corporate America. They rose to prominence in the 70s with many major companies providing some form of this benefit to their executives. As companies started moving away from defined benefit and defined contribution plans and towards 401(k) plans in the 90s, deferral plan arrangements became a solution to offset the "reverse discrimination" those plans imposed against highly compensated executives. Then we hit the 2000s when Enron prompted 409A--and many organizations wondered if deferred compensation would even survive.  

So where are we now? Is such a plan still a viable pay strategy to employ? If so, how do you determine if your business should have one? 

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By Ken Gibson

May 04, 2015

Compensation and Income Inequality


Much has been said in recent years about the disparity of earnings between those who lead organizations and those employed by them.  The underlying theme is unfairness and the premise is that CEO compensation exceeds that of rank and file employees in a disproportionate way relative to the value each bring to their organizations.  Few meaningful remedies are ever offered. For the most part, the subject simply makes for entertaining political conversation. That discussion will surely rachet up a few notches during the upcoming election season, so fasten your seat belt. (Sigh!)

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By Ken Gibson

April 24, 2015

Increase Shareholder Value by Sharing Value


A common concern of business leaders about making increases in compensation is affordability. This is especially true of incentive plans. The assumption is that "costs" will go up if an annual bonus or some type of long-term program such as phantom stock or a profit pool is added--and there's no room in the budget for that kind of increase. It's not an unreasonable response. However, it's rooted in an incorrect premise. Let's look at it from a more enlightened perspective.

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By Ken Gibson

April 17, 2015

5 Pay Practices of Successful, Growth-Oriented, Private Companies


If you lead an ambitious private company, you likely struggle with some part of your pay strategy. Maybe you're comfortable with your salary structure, but your annual bonus is ineffective. Or perhaps you've delegated the formation of your compensation approach to human resources--and are not feeling like it's headed in the right direction. It could be you feel your overall pay structure is solid enough but it's not helping you attract the kind of talent you're trying bring in.

In short, you don't feel there's alignment between compensation and the business model and strategy of the company. As a result, you're feeling some pain.

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By Ken Gibson

April 09, 2015

Why Employees Don't Take Ownership of Results


A common lament of business leaders is that their people don't "get" what's most important. They want their people to think and perform like a business partner but they seldom find them engaged on that level. There seems to be a consistent disconnect and the constant preaching about priorities and targets falls on deaf ears. To make matters worse, many employees act entitled and seem frustrated they aren't earning more--or that this year's bonus is no bigger than last. It's enough to make an owner scream. (If it will make you feel better, go ahead and let one out right now!) 

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By Ken Gibson

April 02, 2015

"To Share Equity or Not to Share Equity? That is..."


I don't think Shakespeare ever ran a business, but if he did, that likely would have been the question; not the infamous one he posed.

If you're a business owner or CEO who has tried to recruit a key producer--or hold on to the premier talent you have--you've inevitably been asked this question: "Can I have equity in the company?"  When faced with that query, you have probably struggled with how to respond.  You don't mind giving away stock if it means a bigger "pie" will be created but you worry about the immediate impact of diluting the present shareholer value. And what if a bigger "pie" doesn't materialize?

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By Ken Gibson

March 19, 2015

4 Reasons Pay for Performance Matters


Business leaders want their people to perform.  They know this needs to happen for the company to grow.

I don't know anyone who would argue with that. Despite that truth, many CEOs still struggle with whether or not the way they pay their people will have any bearing on the results they achieve. When a discussion arises about whether to add a long-term value-sharing plan or expand the scope of who participates in the annual bonus, paralysis sets in. They get stuck on this basic question: "Will it matter?" The concept of pay for performance is called into question primarily because they've "tried" things in the past and they haven't seemed to work. 

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By Ken Gibson

March 12, 2015

Pay and Stewardship: Getting Employees to Own Results


If I'm a business owner, I need my employees to draw the same conclusion I do about "what's important." And I want them to behave in a way that reflects that understanding and commitment. Would you agree?

Stewardship of results, however, does not just occur because employees come to understand better what company ownership wants to achieve. This is an assumption too many business leaders make. "I have told my employees about my vision and what I expect of them, so why are they not more focused? Why am I not seeing the results I anticipated?"  Why indeed? Let's explore the reasons.

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CLIENT SUCCESS STORIES

"VisionLink has helped us successfully navigate a number of complex issues regarding our rewards programs. It has dealt with all facets of these varied issues with a high degree of competence, integrity, and straight forward advice. VisionLink's experienced team has consistently delivered first class results in a timely, professional manner and has become a valued Storm partner."

Thomas K. Grzywacz
Storm Industries, Inc.

"VisionLink has helped us successfully engineer a long-term incentive plan that has empowered our company to reward and retain key talent while increasing shareholder value. The knowledge, patience and deep experience of its team members helped us navigate a road that was unfamiliar to us. Ultimately, VisionLink designed a plan that met the high standards of both stockholders and key management employees. We have further engaged VisionLink to address our business succession and transition planning needs."

Reggie Dupre'
Dupre Logistics

"Over the past several years, National Technical Systems has engaged VisionLink to provide insight and direction on a number of executive compensation issues, as well as a performance evaluation of our 401(k) plan. Under its direction, NTS completely revamped executive level rewards to align with our business growth objectives and the strategic plan of the company. VisionLink's insight and direction have been invaluable. NTS has achieved its growth objectives and our executives feel appropriately rewarded for their performance."

Bill McGinnis
National Technical Systems

"VisionLink arrived on the scene just in time for us. We needed a new framework for our short-term and long-term incentive plans. VisionLink's modeling and forecasting process broadened our horizons and expanded our view of how to use a good incentive system to build, retain and strengthen our senior management team. We remain impressed by their expertise, professionalism and great service."

James Keng
Jimway, Inc.

"Our firm has had a long-term incentive plan for over eight years but we never quite felt like it was firing on all cylinders. We hired VisionLink to re-energize our plan, and they did it! We now have a cohesive awards strategy that's fair to shareholders and valued by our employees. VisionLink's team is technically skilled and very creative. We're happy to recommend VisionLink to firms looking to upgrade their management incentive programs."

John M
FTO Inc.

"Our company was like VisionLink's typical clients. We were great at sales and haphazard at how we compensated our people. VisionLink's process brings great clarity and confidence to our growth planning - and makes compensation a great growth capability."

Dan Sullivan
Strategic Coach ©

"The team at VisionLink helped our company structure a long-term incentive plan that parallels the company's strategy for continued growth as a global market leader within our industry. Their approach resulted in a program that our corporate team and executives embraced on both a professional and personal basis. Through VisionLink's guidance and execution, we were able to create both a motivational tool for current team members and a recruiting device to attract future executive level associates. Well done!"

Mark Rhoades
Fluidmaster, Inc.

"As a leading direct seller of scrapbook photo albums and supplies, Creative Memories has independent consultants across the country. And for over six years now, VisionLink has helped us to stay connected and administer a voluntary 409A non-qualified plan for them. VisionLink has provided support for all aspects of our plan from notification of eligibility through registration and distribution. The VisionLink support team has offered suggestions for improving processes and provided us with outstanding service year after year."

Guy Walker
Creative Memories North America